The Trump Administration announced today that it will address the disparity in global postal rates paid by U.S. businesses. The measure will especially affect businesses in China. However, the independent Small Business & Entrepreneurship Council (SBE Council) of the United States praised the development, declaring that by pulling out of the Universal Postal Union, which sets shipping rates (terminal dues), was long overdue.
SBE Council president & CEO Karen Kerrigan said, according to a release, that the disparity hits small American businesses hard. “Our entrepreneurs have to compete on many fronts that impact costs, and shipping rates are a big one. Why past U.S. negotiators and our own Postal Service would allow this to continue for so long is indefensible.”
“President Trump’s action today is great news for American small businesses,” Kerrigan said. “This wacky system forces our small businesses to pay higher shipping rates than foreign competitors, subsidizes shipping costs for our competitors, all the while exacerbating the challenging financial condition of the U.S. Postal Service.”
The U.S. is part of the Universal Postal Union, the international body that sets terminal dues rates. Currently, terminal dues rates are set by the Universal Postal Union (UPU) and provided by the United States Postal Service (USPS) to foreign shippers have resulted in a severe competitive imbalance that gives these shippers favorable rates for packages sent into the U.S., which happen to be far lower than what U.S. small businesses are charged to ship packages domestically. The dues are fees that postal operators pay each other for the domestic delivery on inbound international mail. Current pricing procedures put small businesses in the U.S. at a competitive disadvantage and also create a loss for the U.S. Postal Service. In the past, the U.S. State Department has not received adequate guidance from USPS over how to achieve parity for American businesses nor even obtain revenue neutral results for the USPS.
President Trump signed a Presidential Memorandum in August that directed the U.S. Secretary of State, Secretary of the Treasury, Secretary of Homeland Security, the Postmaster General and the Chairman of the Postal Regulatory Commission to focus on this issue at the September 2018 meeting of the Universal Postal Union. As of today, the State Department informed the UPU that the United States intends to leave the system and thus “self-declare” new postal rates.
Kerrigan added “Small businesses are grateful for the leadership of President Trump and the work of his team.”
Under Trump’s plan, the United States will withdraw from the UPU (which is under the United Nations) within one year unless the system modifies its policies and regulations in order to facilitate fair international shipping rates. The State Department is to begin bilateral talks with other countries soon to ensure the mail keeps flowing without UPU intervention.
The Universal Postal Union treaty was first drafted in 1874,and sets fees that national postal services charge to deliver mail and parcels around the world. Since 1969, poor and developing countries (and China) have been assessed lower rates by the UPU than Europe and North America. China can be expected to vigorously oppose Trump’s move. While the UPU policy was to assisted poor and developing countries, Chinese companies make up about 60 percent of packages shipped into the U.S. and take advantage of the lower rates to ship clothing, household gadgets and consumer electronics. Because of the resulting low postal rates, there are dozens of websites that offer free shipping from China, in part because of the cheap postal rates. Trump’s trade adviser, Peter Navarro, strongly advocated for the policy change as a means to challenge international bodies, such as the UN and the World Trade Organization, which the White House views as giving little say in international affairs despite the country’s economic power.
The Subcommitte on Government Operations of the House Committee on Government Oversight held hearings on the matter in June.
Navarro told Fox News today that leaving behind the UPU will benefit American businesses and consumers.